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  NBC    Dateline NBC    News/Business. Investigative  
   journalism. (HD) (CC) (Stereo)  

    September 27, 2010
    3:05 - 4:00am EDT  

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public schools, 58% in our poll, if you look at the next grade, 58believ major changes or complete overhaul is needed. and, indeed, secretary duncan, an overhaul is in the works. where are we right now in terms of refor >> we've made tremendous progress. let me be clear, as a country, we have a long, lo way to go. we have to educate ourself to a better economy. education is an economic strategy. you see us being 20th in math and science, we've fallen one generation from first to ninth in college graduates? that's unacceptable. we're paying a terrible price in the economy because we've lost our way educationally. that's why we're pushing so hard for reform. >> there's a lot of money in the reform movement right now. you t most of it. you got billions of dollars. as part of race to the top. president bush started no child left behind. that will be reauthorized, you hope, certainly. where are we with those? you're giving money.
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but there's a lot more conditions to drive accountability. >> we're not investing in the status quo. with the race to the top, it represen less than 1% of the total k through 12 spending nationally, you see 36 states raising standards,ot dummying down things, not lying to children because of political pressure. most states are removing barriers to innovative schools. eliminate the linking of teacher evaluation and student achievement. it's remarkable progress and courage at the local level. that's what we're investing in. great leadership, great courage at the local level. >> talk about this. not just raising problems but talking about solutions. we dwell on the problems so often, i want's not constructe. michelle rhee, there's a political storm in washington about education and the mayor losing the primary. i want to get to that in a minute. i want to ask you, what's working since you've been chancellor? what's the good news? >> well, the good news is what we've shownver the last 3 1/2 years in washington, d.c. is that if you prioritize education, if you make it the number one issue in the city,
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you have the political leadership and the courage to make tough decisions that you can see tremdous progress in a short period of time over the last three years we've gone from being, you know, worst amongs all urban jurisdictions in the country to actually leading the nation in games in our progress of students on the examination in reading and math. so, i think it basically shows if you have -- if you have a -- if you have a singular focus and you really are prioritizing, making those tough decisions that progress c result. >> and, what are you finding in detroit about at's working right now? >> well, a lot of things are working in detroit. i think i would like to go back to secretary duncan mentioned. and that is, although our state did not win inhe race to the top competition, considerable reforms were advanced by the governor and the state legislature and the secretary -- the superintendent of public instruction. and so we are implementing those
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programs although we do not have the funding in place. in particular, more time spent with -- with our teachers and additional expanded date for our students and much moreigor than we're putting in our classrooms so that we can compete in the 21st century. >> randi weingarten, iant to go back to 2002 and no child left behind and president bush and listen again to how he amed what has become the major drivern the reform movement. and that is accountability. watch this. >> i understand taking tests en't fun. too bad. we need to know i america. we need to know whether or not our children have the basic educatio no longer is it acceptable to hide poor performance. no longer is it acceptable to
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keep results away from parents. >> and president bush isn't often given credit for driving accountability because no child left behind became unpopular and yet, indeed, e accountability is what the obama administration has built on. is account aboability at the cof this working? >> president bush is right. tests aren't fun. but they're absolutely imperative to do. but what happened in no child left behind, it became all about the tests as opposed to teaching and learning. accountability is essential as a tool, not as a goal. the goal is how do we help 50 million school children in the united states of america get a great education? so ultmately, we have to have a couple of other tools,ike engaged, robust curriculum. like a real focus on teacher development. like a real overhauling of the teacher evaluation system. and if we look at what the
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countries that have outcompeted -- that outcompete us do is that there's a huge investment in teachers as well as looking at accountability. accountability essential. accountability to the bottom to the t. t not the whole story. >> be specific then, michelle. in washington, d.c., you closed schools, you fired teachers. a lot of controvey around that. randi, do you believe in accountability, what happened in washington, michelle, you start, when you did fire teachers and close down schools that weren't performing? >> we got a tremendous amount of pushback. i think the superintendent bobb knows this as well. people are uncomfortable when you changehat is currently in place. and so what w looked at over the last 3 1/2 years, for example, we closed 23 school unless the first year. we've closed several schos after that. because we cannot continue to pour the same amount of resources in to a faulty syst. we were shrinking in terms of the number of schools that were coming to school but we never
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downsitesed the number of schools that we had. the results of that was that we re spreading our resources way too thin. and we we -- the citizens and the students weren't feeling the amount of money that we were spending every single day. you know, in terms of the teacher aountability, yes, we spent -- we held a very, very high bar. we said it's no longer going to be acceptable for teachers who are ineffective to st in the classroom. we've gotten a tremendous amount of pushback about that. we have ear going to talk about the election. if you talk about the mayor's election, a lot of what you heard from citizens was, well, they fired teachers. what you didn't hear about th is we didn't fire teachers to be mean because we were call luus didn't care, we wanted to remove ineffective teachers from the classro because our students depp serve better. >> you talk about accountability. but you said you shouldn't be deem news demonized but you sued the district when teachers got
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fired. is that the constructive respon response? >> the last sue we did was trying to find out the basis upon which some of the teachers were fired. and ultimately we're still waiting to get the request and things like that. the information request. but at the bottom of this, david, and michelle? we changed the contract to make it more transparent and cohesive, to give michelle and the district more tools on teacher quality. we gave the teachers more tools. we gave the district more tools. the issue in terms of us is to make sure that teachers get the tools and conditions they need toe effective and make sure there's fairness. we know the teacher tenure system is broken and we want to fix it. therere different ways we fixed it in detroit, working with the district there. different ways we fixed it in washington, different ways we fixed it throughout the country. so tissue is, how do we make teachers effective? and also, with all due respect,
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how do we give the good teachers, the 3 million teachers in the united states of america, 133,000 schools, how do we give those quiet unsung heroes the tools and conditions they need to help all children. >> with all d respect, we say that we -- in addition to identifying the ineffective teachers needed to be temple marinated, we identified 16% of the teachers in dc who we rated as highly effective and we said to them, we're going to recognize and reward your work. we're going toompensate you at the level that you deserve to be compensated at. so with our new contract now, we'll be able to pay the most effective teachers who are teaching at high povty areas and high-need subject areas nearly double the amount they were previously making. so we are going to use the approach of making sure that the best people are rewarded. but we also have to have a flip si of that, which is if you're not effective, you can no longer be in the classroom. >> secretary duncan, what happened in washington, d.c. that concerns you? mayor fenty did not win for
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re-election in his primary. >> right. >> it's the real question, i guess. michelle, i should ask you, are you going to stay a chancellor of dc schools? >> i think that's something we still have to determine. and i have to talk to mr. ey, the new -- the presumptive mayor. but i think the important thing to realize is that education reform can continue in dvc, regardless of whether i'm there or not, it can continue as long as the leadership is willing t continue to make the tough decisions. >> secretary duncan, it's a political question but it's germane. you didn't camign at all for adrian fenty, the mayor. you said you don't do politics but you said you would campaign for congressional democrats. why didn't you campaign for fen tip whenthe blowback could be so severe in some of the districts. >> i'm a huge fan of what he and michelle have done. by any measure, the public schools in dc are dramatically
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better today than when they staed. i invested$75 million in the district because of the leadership and he can walk out with his head held high. when the story of dc school reform is written, a huge amount will be around his kounch and leadership. there are thousands around the country. there are national candidates that i need to support who wil drive school reform. mayor fenty did a remarkable job of dramatically improving the quality of education. >> this is one of the issues that reformers talk about. you can't denationalize this effort. i mean, what happened in washington, d.c. and the unions who were a part of this in terms of opposing at the mayor and michelle rhee did, if we make it about individual jurisdictions, the unions are powerful. some of those who oppose the refofrms in the status quo are powerful. is it good enough to step back and allow t district to have themselves. can you prevail and perform when it's this tough? >> the national leaders have to
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be involved and engage in the local level as well. i mean, the reform movement -- whate're doing in detroit cannot take place without very strong sup from governor granholm , mike flanigan, and michelle's case, adrian fenty. every major decision that i have made i have been sued either by local leaders, school board members, and there is a sense of urgency in these urban school districts. you cannot sit ck and let children and not take care of what's needed for children, particularly more rigor in the classrooms, more effective leaders. not just teachers effective leaders. i moved 51 principals this year alone. the school leadership at the building is significantl as important as the teachers that we put before our children in the classroom. i mean, i know that michelle went to the process of closing schools in washington, d.c.
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we -- in 2000, we had 167,000 students in the detroit pubic schools. today we're educating about 84,000, 85,000 students. in the two years that i've been the emergency financl manager, we've closed 59 schools. it is very difficult politically. it's hard on a community. and it's also challenging for parents andstudents. going to take a quick break and we're going to come back and talk specifically about what is at the core of the debate, which is whou is how do we make sure we get the best teachers in front of our students and the accountability to achieve tht. we'll talk to our panel after this brief station break. what had happened in central harlem was failure became the norm. the schools were lousy... the healthcare was lousy...
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gangs were prevalent. violence was all over. families were falling apart. you can't raise children in a comnity like that. people had been talking about things, but not doing anything. hi, mr. canada... how are you? 'm doing great, how 'bout you? right here on 119th street. if we could fix this block, then we could fix the next block, then we could fix the next block... we promised parents, if your child stays with us, i guarantee you that child isoing to graduate from college. failure is simy not an option. the sixty...the seventy... the eighty... the ninety-seven blocks which ends up ing 10,000 children. we start with children from birth, and stay with those children until they graduate. if you really want to have anmpact that is large, you will get there going one step at a time. there is no act that is too small to make a difference. no matter what you want to do, mbers project from american express can help you take the first step. vote, volunteer or donate at membersproject.com. sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined.
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well, i made you a reservation at the sushi place around the corner. well, in that case, i better get bac to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smooie. [ le announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business. hey what's going on? doing the shipping. man, it would be a lot easier ifwe didn't have to weigh 'em all. if those boxes are under 70 lbs. you don't ha to weigh 'em. with these priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. no weh? nope. no way. yeah. no weigh? sure. no way! uh-uh. no way. yes way, no weigh. priority mail flat rate box shipping starts at $4.95, only from the postal service. a simpler way to ship. lord of the carry-on. sovereign of the security line.
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you never take an upgrade for granted. and you rent from national. because only national lets you choose any car in the aisl nd go. you can even take a full-size or above. and still pay the midize price. i deserve this. [ male announcer ] you do, business pro. you do. go national. go like a pro. we're back live from 30 rockefeller plaza in new york to continue our discussion about public school education. i want to talk to you about how to get the best teacher front of our students. i have a parent of three young kids. i go to my child's classroom and i'm told, this teacher is not doing well. we want to give them another year, we want to develop them a little bit. maybe not this year, but maybe next year, things will get better.
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thi that's not good enough for me as a paent. >> right. >> show me specifically what you and others have done to avoid that reality when it appears that the unions said to michelle rhee, you can't get rid of the people, you can't fire them willy nilly even if you don't have the right results. you're demonizing the teachers. >> that result, when the administrator says that to a parent, it's not good for anyone. teachers don't want it, parents don't want it. ultimately what we need to do is weneed to invest in teachers from the moment that they go in to teach in preparation till every single day that they're i a classroom. most of us, i don't know, michelle has told these stories about when she started to teac i told these stories when i started to ach. i wasn't a very good teacher my first year. i was a better teacher my second and third year. so there's going to be some investment lapse. >> we're not talking about a
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learning curve. we're not talking about starting out teachers, teachers who hav been in the system for a long time who failed to perform year after year and removing them is the hardest part. >> let me just go right to that. no one wants a b teacher, david, not teachers, not parents. when i asked our parents this question, overwhelmingly, they wanted to find the tools and knls to help teachers do better. what we tried to do now, what we realized is the evaluation system is totally and completely brokenn the united states. so, our union has tried to invest in creating a new evaluation system as the districts are trying to do that. we've tried to fgure out who is good, who is not. if they're not good, we help them. if we can't help them, we have to weed them out of the profession. you're right. >> is that happening is my question. >> it is now starting -- it is now starting to happen in the last two years at a greater rate than before. >> is that happening from the -- you've been the head of the schools. is that how you see it?
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>> let's be honest, first of all, our new evaluation system where we use student achievement data, how much a student progresses to determine whether or not a teacher is effective or not, we implemented that because we have t power within the district to plement whatever evaluation tool we want. so, we've g a lot of pushback. we sti get tremendous pushback from the unions. so, for example, we just identified about 241 educators of this last summer who were not effective or did not have the certification, etc. and when we did that, we said for the ineffective teachers, people who got that on the evaluation, abusrobust evaluati, we determine that, we get a class action grievance saying we're grieving the way you did this. if the people are ineffective. if as president weingarten said no one wants ineffective
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teachers in the classroom, you can't fight us every stepf the way when we're moving in that direction. >> what do you see in the sense of the overall. this is the core. >> it is the core. >> let's take a ste back. the status quo isn't working for children. it's not working for the country. what the president gets we have to educate our way to a better economy. we have to reward excellence in educati education. reward great teachers and get great principals and great teachers to go to underserved communities. much better suspect for teachers trying to become world class. the teachers not working we have to be more swift in how quick we move them out. not working at any level, for the start, the middle, those at the bottom. not working for the adults, not working for the children of this country. >> this is in part a policy question, in part, a political question. if you look at what michelle rhee has done in washington with mayor fenty, how can they better implement accountability in a way that keeps in mind that there are a lot of teachers, a
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lot of communities, like detroit, like washington, d.c., that rely un those jobs. we're in a severe economic recession. how do administrators go about accounbility in a way that doesn't create political blow back. lawsuits or the blow back at the polls? >> you have to be able to communicate the issues. what you're doin haso be communicated. how you're doing it has to be communicated. and then what processes you're going to put in place to help individuls succeed. and those who do not succeed, they have to leave the system immediately. i mean, we just -- in detroit public schools, we hve a new teacher contract and this year, for the first time, we actually have a new teacher evaluaton system that's being put in place. we -- we're borrowing from what's bei done in d.c. we're borrowing from what's being done in denver. and those -- we have to have an effective way in which wean evaluate teachers. >> you know what? it's not just evaluation of teachers, we have to look at the entire system. >> right.
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>> we have to look principals, everyone through that whole school. >> right. >> we need dramatic change. let's be real honest here. what was going on in washington for decades was an absote disgrace for children. what's going on in detroit for far too long is a disgrace. those children have been desperately underserved. change is hard. there's going to be blow back. when you challenge the status quo, that's difficult. but we have to have the moral courage to do the right thing by children and we have to give the childr a chance, a choice to go in a much better direction thanks to superintendent bobb's leadership. washingt is going in the right direction. change is going to continue to be hard. we'll continue to get push back. we have to keep going forward. >> and in both of those places, david, both of those places, even though it was hard, the union stepped up and did a contract with robert bobb and the union stepped up and did a contract with michelle rh. the union sometimes asks to make sure that things are not arbitrary and capricious.
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let me ask and say this as well -- there are many other diricts like e abc district in los angeles, like the new haven district where the union has stepped up with managers who want to work with us where we are making tt kind of change. so the issue is for ensuring we do some of the things that the secretary said. it's not just about the issue of looking at the snapshot of whether a teacher is bad or good. it's about developing teachers. it's about notspending the $7 billion we spend right now in teacher turnover. we have to do things that help kids every single day in assrooms, which means, investing in teachers like they do in the countries that outcast -- >> i want to bring up the colorado law about evaluation of teachers. and, really the crux of it is is it's a tough loss. you supported it. you don't represent a lot of teachers out there. so the political states are not fraly -- hold on, that's the reality. you represent a lot more teachers in other districts. we all know that. they had tougher evaluations and
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saidp to two years, you uh could be removed. do you support that as a national model? >> we support -- if you help teachers be the best they can be, and evaluate them fairly, then if they have to be removed, they have to be removed. the one thing we want is not to throw the baby out with the bath water. ultimately, we have to fix the due process system to make sure it's a process, fix the evaluation system, but more mportantly, we have to get teachers and kids the support they need so that they can grow. that's what happens in the countries that outcompete us. >> i want to ask a quit question -- i want to address what mark zuckerburg has done wh facebook. $100 million to the newark public schools. tremendous. what's the role of the private money. he said, look, we're operating on the fringes. a lot of the money, you can't deal with the core problems. money, as we talked about b, is not the issue. >> change is the issue. silicon valley or the movement
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to hollywood, the country is starting to take notice. the country, a summit on education, this is the national topic. we have toducate our way to a better economy. that money can drive fundamental change and reform like race to the t is goad p going to lead the country where we need to go. that generosity, it might not seem like a lot of money. the race to the top, $4 billion so i understand like a lot. we spent $650 billion a yea on k through 12 education. less than 1% is changing the country. the money in newark, other money idetroit, washington, chicago, right here in new york, l.a., that private money all of us have investments, the business community, philahropy, all of us have to benvesting in public education. >> i've got 1:30. i'll talk to you about this. i walked out of the film "waiting for superman," my first reaction is a parent. i ask myself, not as a moderator of this show, but as a parent, what am i going to do to help?
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what can the individual move bid this do to make a difference? we're not scratching our head to say, gosh this, is so hard. >> that's the fundamental question. people have been asking me that since they've viewed the movie. we need a national movement around us so people, doesn't matter if they live in idaho or new york or california, who want to -- who are watching the movie and saying this is absolutely wrong. we're doing an injtice to our kids. how can we do better? we need a national movement of people, whether it's giving $10 or giving $100 million. the mon we got from our external funders did leverage -- provide us with the leverage we needed to sign this revolutionary contract. and now it's having reverberations across the country. and i think people can't underestimate how much a phone call to a politician, you know, dollars invested, can really helpo see major changings. >> we're going to have to leave it there. if you drive by a public school,
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even if your kids don't go there,alk in and ask how you can help. tutor, provide resources to a teacher, i think there's a lot we can do just on that baseline level. thanks to all ofyou. a conversation that will continue here at nbc news for the week and around we know why we're here. toive our war fighters every advantage. ♪ [ man ] to deliver technologies that anticipate the future, today. ♪ and help protect america, everywhe. from the battle space to cyberspace. [ female announcer ] around the globe, the people of boeing are working together. to give our best, for america's best. that's why we're here. ♪ [ courier ] i'm a legal courier. if i have to look at multiple cases, with blackberry torch i can have multiple tabs going, scroll over to it -- there it is. [ dj i'm not always gonna have two turn tables and a mixer. i love the music player on the torch.
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nation." brian williams will monitor a town hall this afternoon. and president obama sits down with matt lauer on a special program tomorrow. and to mark the 50th anniversary of the great debate of 1960, we teamed one the university of virginia's center for politics to present a special discussion on tho historic and first of their kind presidential debates between vice president richard nixon and then senar john f. kennedy, one of which took place at nbc's washington studio which is now the home of "meet the press" back in our home studio. talk to journalists and staffers who are part of history 50 years ago about what happened behind the scenes and the significance of those debates on our politicalandscape today. all on our webte at mtp.nbc.com. you can follow me on twitter as well for more on that. we'll be off next week for nbc sports coverage of the ryder
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-- captions by vitac -- www.vitac.com her mom, a recent widow, had been having a tough time. then she started smiling again. >> she said, i'm just so excited. i just have this wonderful
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thing. >> an investment opportunity. >> you figured if your mother was set with it why not take a chance? >> yeah. >> she invested, too, but time went by and no returns. what did you think when your wife decided to mount her own investigation? >> well, i knew i couldn't stop her. >> working in secret, she'd unravel the truth. it was a big fraud. investors' cash used for simply unbelievable purposes. ♪ you know what to do >> to bank roll celebrity wanna-bes. >> it was a $3 million dress. >> would this daughter's decision to expose a scam mean selling out her own mom? >> they said to me, y investors can get in trouble. >> they could come after your mother at some point. >> a daughter's dilemma. h how painful was that? >> it was hard. >> burned by an offer too good to be true.
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good evening and welcome to "dateline." in most investment scams victims don't realize what's happened until it's too late but when the woman you' meet tonight became suspicious about a financial opportunity she had heard about from her mother, she saw a chce to go from investor to investigat investigator. the problem was to help expose a multimillion dollar fraud this daughter would have to risk something far greater than money. ♪ >> becoming a pop superstar isn't easy. talent helps and looks never hurt. but short of winning "american idol" the best career move may be to find a wealthy sponsor to believes in your potential. someone with money to produce your first cd, follow your every move with cameras. >> and right now it's my new album. >> and hire an entourage to make you look good in the video. ♪
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>> that was exactly the case for a handful of lucky hopefulsn los angeles. they had been signed to a record label that seeme to have no shortage of cash to lish on its up and coming talent. >> they flew in core yog rafhoc from new york. >> i just ought he was filthy rich. >> as with just about everything you'll hear in this story, if it sounds too good to be true, well, it probably is. >> they're mter manipulators. >> mom? >> kim and her family live a thousand miles away from those aspiring pop stars in l.a. the unlikely tale of how they are even remotely connected and of how a simple business venture threatened to pit a moth against a daughter begins back in 2003. at the time kim lived in montana with her husband, sons, and recently widowed ther. >> we had gone through a really rough fall as a family. >> a difficult time, kim says, because her step father had been kled in a car accident and her
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mother, debby, had shattered an ankle during a church retreat and needed lots of help. >> she is a wonderful grandmother and she's always been there for my children and her other grandchildren as well. >> after a few months under the same roof, kim and her husband, david, saw debby's spirits begin to lift, but at first they weren't sure exactly why. all th knew was she had been spending a lot of time on the phone, sometimes for hours a night. >> finally, david and i asked her, who are you talking to? and she just said, you know, i'm just so excited. you know, i just have this wonderful thing. >> so she was starting to pull out of this funk. yes. >> from losing her husband. >> yes. >> and the injury she had suffered. >> yes. >> that's a good thing. >> it was a good thing. we were just curious and so she said, kim and david, i can't explain it to you but if you want to know what's going on we'll set up a conference call. >> hello. >> can you guys hear me? >>o we have anybody else here?
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>> turns out kim's mother had been dialing into a conference call for updates on a financial investment she bought into. also on the line was another member of kim's family, a cousin kim calls aunt millie. >> yeah, henry? >> yes. >> this is llie. >> aunt millie had iroduce kim's mother to tri energy, a company that owned coal mines and had investments in gold. kim and her husband agreed to hear the pitch. >> so we're like, okay. we' game to listen. >> first, i want to thank everyone for coming on tonight. what we are going to do is give you a presentation of our opportunity. >> they outlined a coal ning operation, you know, of which i knew nothing about coal mining. but throwing out numbs of tons this and tons that. >> 're looking at about 9 million tons of coal. >> tri energy representatives said that the company was about to make a killing with
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state-of-the-art clean coal. >> you don't have to worry about the toxic emission from the sulfur because it's under 1% sulfur. >> did they sound like they knew what they were talking about? >> they absolutely did. >> coal prices are $50 to $55 a ton. >> he seemed to have some data and know what he was talking about. >> the company just needed some cash to buy new mining equipment. they were told they'd double their money in 60 days. >> and that's one of the reasons why we're still going out and talking to friends and family and frids of friends. >> but there was much more to tri energy than making money, kim learned. once they were paid out, the investors, kim'smom included, planned to use a big chunk of their profits to launch charities around the globe. >> all of this in this group are about creating a new world. >> it was a good idea, endorsed by the company leaders. >> you can actually do this. >> you have just normal people that want to do good in the
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world and believe they have found a way to do that. >> and make money at the same time. >> tri energy seemed to be something rare -- a business with a soul. >> there was a lot of talk about religion, about faith, and about god >> kim and her family are mo mormons but the investors cut across many faiths. >> it is an answer to prayer, god, and we are so thankful that you are directing the affairs, lord. >> this is bigger than all of us. this is god's project. he's providing and bringing us through. >> the opportunity struck a chord with kim's church going family. her sister invested $5,000, another cousin put in 10. the wasn't much time for the flannagans to think or do any research. >> they were basically saying to us that these deals were closing. >> so get in now. otherse you'll miss this opportunity. >> that's right. and we really don't need any more funds for this to close but because of your relationship we're going to let you in. >> b at the time the
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flannagans didn't have much extra money to invest, so kim and david borrowed $10,000 from kis mom who had just gotten a big life insurancepayout. they wired it the next day. >> were you nervous about borrowing $10,000 from your mother-in-law to make this investment? >> i had access to funds in a 401(k) if i really got in a pinch and had to pay it back to her. we could have come up with it but it wouldn't have been easy. >> you figured if your mher was set with it, your aunt millie was set with it, if these guys were coident in it, why not take a chance? >> yeah. imean, we thought, well, let's roll the dice a see what happens. >> kim and david took a gamble, but it wasn't long before they got a sinking feeling something wasn't right. >> you just can ask him whatever you'd like. >> where is the money? >> coming up, a vaguely queasy feeling becomes a harsh reality. >> we just said oh, we're going to owe m mom $10,000. >>hen "too good to be true" continues.
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kim flannagan admits she and her husband didn't have much investing experience when they put ten grand into a mining operation called tri engy. did you have a lot of extra money to invest at that point in your life? >> no, definitely not. we were a fairly paycheck-to-paycheck family. >> but the deal came highly recommendedby kim's own mother and the compa seemed to be an open book updating its hundreds
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of investors with regular conference calls. >> you would dial into a number andou would listen to updates. >> soverything is startin to look very bright. >> like kim, most of the investors on the line had been recruited by family and friends. >> they got to know one another. people knew that my mom was a widow. >> we prayed for every member of th group. >> investor angelina encarnacion heard about the deal from kim's aunt millie. angelina once worked as a financial planner, and at the time was buying and selling real estate in northern california. how much did you initially invest? >> initially they only asked for 5,000. whatever wealth that going to be accumulated out of this deal was supposed to be used f something good. >> as inveors listened in they learned that tri energy d two executives on salary, one led the nightly call. >> bob, you want to tell a little bit of what we've got going now? >> the other also happened t be a pastor at a small church in
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california. and there was a third man they introduced to kim and the her investors. his name was dr. henry jones. the investors were told that dr. jones was already engaged in the kind of international good woks they aspired to. he had a relationship with nelson mandela. and they said jones had important connections in the middle east. the prince of jordan and the head jordanian intelligence. >> angelina remembers henry jones dropping in on the conference calls between meetings with very important people. >> let see if henry is there. >> at some point he tried to reach him. he's a hard fellow to reach arngs wow, he is finay here. >> now you can really talk. say hello, henry. >> hi there. >> just such a busy person talking to the big guys, big players. >> the top ministers for the g-8
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countries are meeting in europe. >> but what henry jones was doing with tri energy and how he fit into the coal ming business was a mystery to kim flannagan. >> they're supposed to get back to us before 9:00 a.m. our time with respect to whether or not the price was right. >> jones was apparently brokering a complex inteational gold transaction. >> some kind of gold transfer. >> transfer. >> yes. >> from where to where? >> i have absolutely no idea. >> you didn't get it. did they say in the conference call how much gold was suppose tod be involved? >> a lot. >> a lot. yes. >> the deal was supposed to move 20,000 metric tons of gold from israel to wealthy arab buyer. jones just needed cash for lawyers and banking fees. when the deal closed they said tri energy would make $200 million, enough money to expand its mining operation and pay out all the investors who could th launch thoselobal charities. kim and her husband, david, however, were growing more than
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a little skeptical. >> they talked about the gold transfer and my iitial response was, you know, n way. >> but the real test of faith came one night when kim dialed into the conference call and caught what sounded like an investor rebellion in progress. >> first of all, everybody, it's indicated that the transactions very much alive. >> a lie or alive? >> alive a-l-i-v-e. >> a few investors were questioning the legitimacy of the gold transaction. >> go ahead, everybody. just ask him, you know, whatever you'd like. >> where's the money? >> and now the flannagans' hasty investment gamble was seeming like a foolish bad bet. >> david and i looked at each other and we just said, we're going to owe my mom $10,000. >> but what happened next along with a choice kim flannagan made would put her mother and their retionship at risk. ow painful was that? >> it was hard.
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>> what else was hard? facing the fact that her family was being ripped off and they weren't alone. >> it became not about my mother. it became about other people as well.
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at first tri energy had looked like a win-win proposition, a lucrative return on investment with profits going to charity. >> there was a lot of prayer. there was a lot of talk about this investment being diestically inspired. >> this is not a possession of mine. >> but to kim flannagan, the whole deal began to sti to high heaven. most of theinvestors were issued promissory notes guaranteeing a 2-1 return in 60
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days. th payout would be even more if the gold dea closed before the promised date but for many investors the deadlines came and went. they were told there were problems at t coal mine and that cash was tied up in that international transaction. >> we were due payout. how come, you know, we're stalling here aga? >> all i have to tell you is basically the deal will be complete. >> the company executives tried to reassre the skeptics. >> the kind of power and spirituality within the group, we canno believe that we've all come together he like this not to emerge triumphant. >> but kim and her husband were now convinced that tri energy and the deal bing brokered by dr. henry jones were a sham. >> it was a financial soap opera. >> s

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